Networks versus vertical integration

We construct a theory to compare vertically integrated firms to networks of manufacturers and suppliers. Vertically integrated firms make their own specialized inputs. In networks, manufacturers procure specialized inputs from suppliers that, in turn, sell to several manufacturers. The analysis shows that networks can yield greater social welfare when manufacturers experience large idiosyncratic demand shocks. Individual firms may also have the incentive to form networks, despite the lack of long-term contracts. The analysis is supported by existing evidence and provides predictions as to the shape of different industries.

Nurse-led behavioral management of diabetes and hypertension in community practices: a randomized trial.

BACKGROUND: Several trials have demonstrated the efficacy of nurse telephone case management for diabetes (DM) and hypertension (HTN) in academic or vertically integrated systems. Little is known about the real-world potency of these interventions. OBJECTIVE: To assess the effectiveness of nurse behavioral management of DM and HTN in community practices among patients with both diseases. DESIGN: The study was designed as a patient-level randomized controlled trial. PARTICIPANTS: Participants included adult patients with both type 2 DM and HTN who were receiving care at one of nine community fee-for-service practices. Subjects were required to have inadequately controlled DM (hemoglobin A1c [A1c] ≥ 7.5%) but could have well-controlled HTN. INTERVENTIONS: All patients received a call from a nurse experienced in DM and HTN management once every two months over a period of two years, for a total of 12 calls. Intervention patients received tailored DM- and HTN- focused behavioral content; control patients received non-tailored, non-interactive information regarding health issues unrelated to DM and HTN (e.g., skin cancer prevention). MAIN OUTCOMES AND MEASURES: Systolic blood pressure (SBP) and A1c were co-primary outcomes, measured at 6, 12, and 24 months; 24 months was the primary time point. RESULTS: Three hundred seventy-seven subjects were enrolled; 193 were randomized to intervention, 184 to control. Subjects were 55% female and 50% white; the mean baseline A1c was 9.1% (SD = 1%) and mean SBP was 142 mmHg (SD = 20). Eighty-two percent of scheduled interviews were conducted; 69% of intervention patients and 70% of control patients reached the 24-month time point. Expressing model estimated differences as (intervention--control), at 24 months, intervention patients had similar A1c [diff = 0.1 %, 95 % CI (-0.3, 0.5), p = 0.51] and SBP [diff = -0.9 mmHg, 95% CI (-5.4, 3.5), p = 0.68] values compared to control patients. Likewise, DBP (diff = 0.4 mmHg, p = 0.76), weight (diff = 0.3 kg, p = 0.80), and physical activity levels (diff = 153 MET-min/week, p = 0.41) were similar between control and intervention patients. Results were also similar at the 6- and 12-month time points. CONCLUSIONS: In nine community fee-for-service practices, telephonic nurse case management did not lead to improvement in A1c or SBP. Gains seen in telephonic behavioral self-management interventions in optimal settings may not translate to the wider range of primary care settings.